Unemployment Predictions for 2015

What will the US unemployment situation look like in 2015? Let’s take a look at some of the most important unemployment predictions.

Unemployment Rates Will Continue to Decline

2014 saw a steady decline in unemployment rates. By December of 2014, the jobless rate had dropped to a six-and-a-half-year low while the unemployment rate had dropped to 5.6 percent. All in all, the economy generated an impressive 2.95 million jobs, the strongest showing of any year since 1999.

Long-Term Unemployment Rates Will Shrink

During the Great Recession, labor participation rates took a nosedive. At 62 percent, the current labor participation rate (defined as the proportion of the population aged 15 and over that is economically active) is quite low.

This is in part because of the high rates of long-term unemployment. But in 2015, things are also looking up for the long-term unemployed. The rate of joblessness, defined as people who want to work full time but have given up looking, fell to 11.2 percent, the lowest rate since September of 2008.

Wages Will Rise for Skilled Employees

Those in skilled sectors especially should expect to see rises in wages. “It is getting to the point where unemployment is at such a low level that businesses are having harder and harder times finding skilled engineers, technology and health care workers, accountants and tradesmen.

We are starting to see significantly more shortages of people with these skills. As you see shortages, wages start to go up too,” explained John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement firm. Less of a labor surplus means more competition among employees for skilled workers, which naturally forces wages up.

“We see many encouraging signs that the US economy is approaching condition called full employment where companies would have to keep pay raises attractive in order to retain and attract employees,” said Sam Bullard, senior economist at Wells Fargo. Several projections anticipate that wages will increase by 2.5% this year, which would be the highest increase since 2008.

Higher Wages in Low-Wage Sectors

And we will see increased demands for higher wages in low wage sectors. While we are starting to see wages rise for skilled employees, those in low-wage, unskilled sectors are still facing wage stagnation. In fact, November of 2014 saw a 5% drop in average hourly earnings, and over the course of the past year earnings rose a mere 1.7%.

People might be getting hired, but wages are stagnating, which isn’t good. 2014 saw movements across the country for a higher minimum wage gain momentum, particularly in the fast food and retail sectors. This pressure will only increase in 2015.